Initially when the law of goods and services came into force in the year 2017, the GST registration limit for goods was Rs 20 lakhs for the entire country except the special states. For the special category of states the GST registration threshold limit for goods was Rs 10 lakhs. But later it was found that small businesses are negatively affected through this, hence the turnover threshold has been increased for both the general states as well as the special category states. Now the threshold for the general state is Rs 40 lakhs whereas it is Rs. 20 lakhs for the special category of states. One more thing which must be clear is that this threshold limit is particularly for the goods, it is still the same for the services.
What is the GST Registration Limit?
Not every business has to register for GST under the law. Only businesses that go over a certain yearly sales limit need to sign up for GST. This limit is called the GST registration limit for goods in case of goods and GST registration limit for services in case of services. There are some exceptions to this rule listed in section 24 of the GST Act of 2017, where this GST registration threshold limit for goods as well as services is irrelevant. In India, the threshold is generally the same across most states, except for special category states.
What is GST Registration?
GST Registration is when individuals or businesses sign up with the GST department. It needs to be done after crossing a set sales limit, known as the GST registration limit for goods and services. To be acknowledged as GST taxpayers under the Goods and Services Act of 2017, it is compulsory to take this registration. It’s a tax on the exchange of goods and services which is a major tax reform in India. It is applicable in around 160 other countries, categorized into CGST, SGST, and IGST.
The main goals of GST registration include achieving a unified tax system across the nation, consolidating various indirect taxes, eliminating tax cascading, preventing tax evasion, broadening the taxpayer base, and promoting digital tax practices, working towards a more uniform and efficient tax system in India.
Important Things Regarding GST Registration and Limit
There are many important aspects of goods and service tax registration in India. Some of the Key things one must be aware regarding the goods and services tax registration and the GST registration limit for goods and services are mentioned below:
Activities Eligible for Taxation Under GST
- Supply of goods
- Supply of services
- Sale of goods
- Sale of services
- Import of commodities
Activities Exempted From GST Registration
- Service providers get exemption under section 11 of the GST Act of 2017
- Supplier of goods get exemption under section 11 of the GST Act of 2017
- Individual or organization does not fall under the GST registration limit for goods and services
- Employee services
- Court as well as tribunal services
- Funeral and related services
Exception of GST Registration Limit for Goods and Services
- All businesses involved in online trade must register for GST, regardless of turnover.
- If a business engages in transactions across states, they must register for GST, irrespective of turnover.
- Those involved in occasional or irregular supplies must register for GST.
- Registration is mandatory for those required to pay tax under the reverse charge mechanism.
- Companies and individuals falling under Section 9 Clause 5 must register for GST.
- Non-Resident Indians engaged in taxable supplies are considered taxable individuals.
- Individuals or entities covered under section 51 of the GST law need to register for GST.
- Agents or representatives responsible for paying GST on behalf of their principal must register.
- Entities distributing input services are required to register for GST.
GST Registration Limit for Goods and Services
It is very important for all the business owners to know about the GST registration limit for goods and services, hence we decided to define the GST registration threshold limit for goods as well as services in the table given below:
| GST Registration Limit | Description |
| GST Registration threshold Limit for Goods | The Goods and Services Act of 2017 initially imposed the same GST registration threshold limit for goods and services that is Rs. 20 lakhs. It became evident that this cab was having a detrimental effect on small firms. As a result, the government increased the bar for people in the products trade to assist these smaller businesses. Presently, the threshold stands at 40 lakhs for companies that deal in products. The threshold was raised from Rs. 20 lakhs to Rs. 40 lakhs by notification no. 10/2019-Central Tax, which was issued on March 7, 2019. |
| GST Registration threshold Limit for Services | Businesses in India can be broadly classified into two groups: those that sell tangible goods and those that provide services (such as banking, education, or healthcare). Contrary to popular belief, the GST tax system does not apply to services in the same way that it does to products. When the GST was first implemented in 2017, everything was the same for both. But in 2019, the guidelines were modified. The GST registration threshold limit for goods was raised, but the cap for companies offering services remained at Rs 20 lakhs. |
Conclusion
Businesses that trade in India are subject to different GST registration limit for goods and services. The first threshold for businesses dealing in commodities was set at Rs. 20 lakhs, which had a negative effect on smaller businesses. The government increased the cap to Rs. 40 lakhs to support small product-based firms in order to help these businesses. However, service companies’ GST registration threshold remained fixed at Rs. 20 lakhs. Contrary to popular belief, which holds that goods and services are subject to the same GST level, these modifications indicate different thresholds for firms that sell things and those that provide services, guaranteeing that the tax system in India is clear for both types of enterprises.
